CES preview: Tech sales expected to fall in 2014, industry group says

The LG Electronics LG G Flex phone is shown at a press event at the Mandalay Bay Convention Center for the 2014 International CES on January 5, 2014 in Las Vegas, Nev. (Ethan Miller/Getty Images)

Global technology sales fell short of expectations last year, and now industry researchers expect them to further decline in 2014.

Smartphone and tablet sales have eaten into spending on other products, said Steve Koenig, director of industry analysis at the Consumer Electronics Association. But with prices of both types of gadgets starting to come down, overall spending growth on them is expected to slow markedly this year, placing a big drag on the entire consumer electronics market.

“We're awaiting the next big trend” to rejuvenate the technology market, Koenig said at a press event here on Sunday in advance of this week's Consumer Electronics Show, the tech industry conference held here every January that's expected to draw 150,000 attendees.

Sales of consumer electronics products came in at an estimated $1.07 trillion worldwide in 2013, according to research from the CEA and GfK, a German market research firm. That was a record amount that represented 3 percent growth from the prior year and reversed a decline in sales in 2012.

But it fell shy of the 4 percent growth that CEA and GfK forecast for 2013 last January. And the growth was very uneven. The only technology products that saw significant sales growth in dollar terms were smartphones and tablets. And major market areas such as Western Europe and the developed countries of Asia, which includes Japan, saw declines in sales last year.

Sales slowdown

And the forecast for 2014 is less positive.

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The dollar value of tablet and smartphone sales grew 30 percent and 27 percent, respectively, in 2013. This year, CEA and GfK expect the dollar sales of those two product categories to grow just 9 percent and 6 percent, respectively. Considering that sales of those two categories of devices alone represent 43 cents of every dollar spent on technology products worldwide, said Koenig, the slowdown in their sales growth will weigh heavily on the entire industry.

The two organizations don't expect the number of tablets and smartphones sold to slow markedly. Instead, they expect consumers to spend less on average for each device. To reach customers in emerging markets such as China, device manufacturers are being forced to offer devices at lower prices.

“You can see how that puts the brakes on (overall) growth,” Koenig said.

Three of the new product categories expected to make a big splash at CES this year — smartwatches, ultra-high definition televisions and 3D printers — are all expected to grow rapidly this year. But all three are “nascent” markets and are unlikely to significantly affect overall technology spending, analysts said.

For example, CEA expects around 485,000 ultra-high definition televisions and less than 100,000 consumer-targeted 3D printers to be sold in the United States this year. Those numbers represent small fractions of the overall television and printer markets.

“We're still very early in the rollout,” said Shawn DuBravac, the CEA's chief economist, speaking about ultra-high definition TVs, which offer super-sharp images on large-screened displays.

Shift to Asia

CEA and GfK expect electronics sales in North America, which includes the United States, Canada and Mexico, to fall 1 percent in dollar terms in 2014 after rising 3 percent last year. While sales of technology products helped bring the United States out of the recession caused by the housing bust, Koenig explained that consumers are shifting their purchases to other products, such as furniture and appliances.

Koenig further noted that last year, the electronics industry marked two major milestones:

For the first time, sales of tech products in emerging countries such as China were essentially equal to the sales of such products in developed countries including the United States.

As recently as 2010, spending in developed countries represented 60 percent of total tech spending worldwide.

Meanwhile, tech spending in the emerging economies of Asia, notably China, outpaced that in North America for the first time last year.

“We've been talking about this shift for years,” Koenig said. It's “only going to amplify.”

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